Abstract
This paper empirically analyses variation in use of formally, semi-formally, and informally regulated finance using the South African National Income Dynamics Study longitudinal data. The logistic regressions indicate that many individuals use a combination of services across all levels of regulation depending on age, gender, education, population group, religiosity, and social trust. Widespread use of informally regulated finance in South Africa is particularly evident on the savings side through savings groups/stokvels. The originality of the paper lies in its use of nationally representative longitudinal data to disentangle and analyze the variations in the use of different financial mechanisms, moving beyond the conventional formal–informal dichotomy. In doing so, it contributes to ongoing debates on financial inclusion by demonstrating that informally regulated finance represents a rational, adaptive response to the limitations of formally regulated services rather than a residual or inferior alternative. Depicting the market as dualistic is therefore misleading, ignoring the need for a more nuanced understanding and official recognition of the drivers of financial services’ use.
| Original language | English |
|---|---|
| Article number | 47 |
| Journal | Journal of Risk and Financial Management |
| Volume | 19 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 7 Jan 2026 |
Data Availability Statement
The data presented in this study are original and were collected for the purpose of the first author’s PhD study entitled “The nature and growth of informal finance in selected Sub-Saharan African countries”. In line with the privacy agreements established with participants as well as ethical guidelines and institutional protocols, access to the dataset is restricted to protect the confidentiality and anonymity of the study participants.Funding
This study was funded by the University Staff Development Program (USDP) as well as Bath Research in International Research (BRID) fund and the APC was funded by the University of Fort Hare.
